A month has gone by since the last earnings report for Shake Shack (SHAK Quick QuoteSHAK - Free Report) . Shares have added about 8.8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Shake Shack due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Shake Shack Q3 Earnings & Revenues Beat Estimates

Shake Shack posted third-quarter fiscal 2024 results, wherein both earnings and revenues beat their respective Zacks Consensus Estimate. The top and bottom lines also increased on a year-over-year basis.

In the quarter, the company ramped up its investment in marketing strategies and programs aimed at increasing guest engagement and brand awareness, even amid a challenging market environment. These efforts have paid off, as the company has achieved some of the highest brand awareness levels on record, which, in turn, is fueling robust sales and profitability growth.

SHAK’s Earnings & Revenue Details

SHAK’s fiscal third-quarter adjusted earnings per share (EPS) came in at 25 cents, which beat the Zacks Consensus Estimate of 20 cents. In the prior-year quarter, the company reported adjusted EPS of 17 cents.

Quarterly revenues of $316.9 million beat the consensus mark of $315 million. The top line increased 14.7% on a year-over-year basis.

Same-Shack sales increased 4.4% year over year compared with 4% growth in the previous quarter. Our estimate for the metric was 2%.

Shack sales rose 15.1% year over year to $304.9 million. We expected the metric to be $302.6 million.

Licensing revenues increased 7.1% year over year to $12 million. We anticipated the metric to be $11.9 million. Shack system-wide sales rose 12.8% year over year to $495.1 million.

Operating Highlights of SHAK

In the quarter, operating loss came in at $18 million against a gain of $5.7 million reported in the prior-year quarter. Restaurant-level profit margin was 21%, up 60 basis points (bps) year over year.

In the fiscal third quarter, food and paper costs (as percentages of company revenues) contracted 90 bps year over year to 28.2%. Labor and related costs (as percentages of company revenues) contracted 80 bps year over year to 28%.

Total expenses in the quarter came in at $334.9 million compared with $270.6 million reported in the prior-year quarter. Our estimate for the metric was $306.5 million.

Adjusted EBITDA in the reported quarter amounted to $45.8 million compared with $35.8 million reported in the year-ago quarter. Adjusted EBITDA margin expanded 140 bps year over year to 14.4%.

Balance Sheet of SHAK

As of Sept. 25, 2024, cash and cash equivalents totaled $310.9 million compared with $224.7 million as of Dec. 27, 2023. Total long-term debt at the end of the fiscal third quarter came in at $246.4 million from $245.6 million as of Dec. 27, 2023.

SHAK’s Q4 & Fiscal 2024 Outlook

For fourth-quarter fiscal 2024, the company expects total revenues to be between $322.6 million and $327 million. Licensing revenues are projected in the range of $11.6-$12 million. The company anticipates fiscal fourth quarter Restaurant-level profit margin to be nearly 22%.

For the fiscal 2024, the company expects revenues to be $1.25 billion. Licensing revenues are projected in the range of $44.6-$45 million compared with the previous expectation of $44-$45 million. Restaurant-level profit margins are projected to reach 21% compared with the previous projection of 20.6-21%. The company expects Adjusted EBITDA in the range of $168-$170 million.

The company expects approximately 45 company-operated openings in the fiscal 2024. It also anticipates approximately 35-40 licensed Shack openings at the same time.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month.

The consensus estimate has shifted 9.37% due to these changes.

VGM Scores

Currently, Shake Shack has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Shake Shack has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry Player

Shake Shack is part of the Zacks Retail - Restaurants industry. Over the past month, Chipotle Mexican Grill (CMG Quick QuoteCMG - Free Report) , a stock from the same industry, has gained 11.3%. The company reported its results for the quarter ended September 2024 more than a month ago.

Chipotle reported revenues of $2.79 billion in the last reported quarter, representing a year-over-year change of +13%. EPS of $0.27 for the same period compares with $0.23 a year ago.

For the current quarter, Chipotle is expected to post earnings of $0.24 per share, indicating a change of +14.3% from the year-ago quarter. The Zacks Consensus Estimate has changed +1% over the last 30 days.

Chipotle has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.